Tether, a major stablecoin issuer, has announced a new policy starting December 9 to voluntarily freeze wallets on the Office of Foreign Assets Control’s (OFAC) Sanctioned List. This move, part of Tether’s efforts to work with regulatory bodies, has been in effect since December 1st, targeting wallets associated with sanctioned individuals and entities.
Enhanced Compliance
On December 9, Tether, known for issuing the stablecoin, announced the initiation of a voluntary policy to freeze wallets. This measure is a part of Tether’s continuous commitment to collaborate with law enforcement and regulatory bodies.Â
Since the start of December, Tether has actively been applying constraints in the secondary market. These actions are aimed at preventing transactions involving entities and individuals on the OFAC’s Specially Designated Nationals (SDN) List, which comprises both individuals and companies linked to or controlled by countries facing sanctions.
Tether Enhances Security with New Wallet-Freezing Policy
Tether, in its latest announcement, emphasized that its new wallet-freezing policy is a proactive step towards deeper collaboration with international regulators and law enforcement agencies. This initiative is seen as a significant enhancement to the current security protocols in place.
The move comes as part of a broader effort to curtail cryptocurrency transactions associated with illegal activities, such as terrorist financing and the trafficking of illicit substances like fentanyl. The U.S. Department of the Treasury has been actively utilizing the Specially Designated Nationals (SDN) List to clamp down on such activities.
Breaking away from its previous positions on this matter, Tether has already started freezing wallets that are listed on the SDN List.
Tether’s Response to Regulatory Changes and Rising USDT Value
Tether has updated its policy on dealing with sanctioned entities. In August 2022, the company stated it would not independently freeze wallets linked to the sanctioned Tornado Cash addresses unless legally required.Â
This change in stance is significant, considering the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) reported that around $7 billion in cryptocurrency has been laundered through Tornado Cash since 2019.
Paolo Ardoino, the CEO of Tether, highlighted the company’s strategic shift in policy. He underscored their commitment to enhancing the secure and positive use of stablecoin technology by voluntarily freezing wallet addresses recently added to the SDN List, as well as those previously included. This move, he noted, is aimed at fostering a more secure and robust ecosystem for all stablecoin users.
Interestingly, this proactive approach towards regulatory compliance comes at a time when the U.S. is intensifying its crackdown on crypto businesses. Despite these challenges, Tether’s USDT has seen its market value soar to new heights, indicating strong market confidence in the stablecoin amid a tightening regulatory environment.
